By ROBIN GHOSH
( FORMER CHIEF ECONOMIST, BENGAL CHAMBER OF COMMERCE AND INDUSTRY)
KOLKATA, 22 AUGUST 2022
We have in earlier issues discussed product market fit and the team we need to upscale the business. Here in this post, we shall focus on formulating a business model for your proposed venture.
When we talk of a business model, it is essentially a set of questions which typically the investors will throw at you before they decide to fund your project.
The typical questions are:
1 .How will your business make money?
2 .What will be your revenue flow and what will be your cost budget ?
3 .What is your core market and key customers?
4 . What are the value propositions of your product and service ?
5 .What kind of marketing channels do you have in mind to reach the target customer group.?
6 .What bundle of resources in terms of finance, manpower , technology, system you need to launch and execute the project.
7 . What kind of partners you need to roll out the business and how will you find them.
8 .What is a unit in economics ? Will the company make more money as it scales up? Is the economics positive?
Answers to the above questions are basics. But you must understand that investors also explore and look forward to
1. The competence of the startup team in understanding the problem they propose to solve.
2. Does the team have a forward looking mindset?
3 .Does the team have a learning attitude?
4 .Does the team have a mental model to receive feedback, correct the
course of action and improvise.
5. Investors prefer co-founders as opposed to individuals.
6 . Investors explore whether your business has started receiving traction through user adoption, engagement, and revenue generation.
7 .Investors are keen to know whether the market in which you are pitched is big enough to earn cash return .
8 .Investors are keen to explore and assess whether your business will have a competitive edge in the market, have positive network effects and scope for adopting advanced technology.